CANBERRA

Australian-Japan Trade Negotiations
The major problem which has been delaying the progress of the
negotiations is the Australian request that Japan should purchase
400,000 tons annually of Australian wheat. Japan has, until now,
been obtaining her soft wheat requirements from the United States
under a P.L.480 deal but no P.L.480 deal will be made this year
and the way is now clear for a resumption of the talks. The
Japanese have suggested that 400,000 tons is too high a figure and
have said that Australia appears to be offering most-favoured-
nation treatment in return for concessions on wheat. They have
been told that this is not the case and that Australia is
genuinely seeking the mutual accord of most-favoured-nation
treatment.

2. The stage reached before the adjournment of the discussions in
December was as follows:

3. In formal discussions the Japanese were given details of the
Australian requests on individual commodities, the goods
considered to be particularly sensitive to Japanese competition,
the way the new anti-dumping legislation will operate, and the
steps Australia expects the Japanese Government to take to prevent
disruption of Australian industries and the material which could
be made available to facilitate their task. The Japanese indicated
the problems they would encounter in meeting individual requests
and in enforcing control on Japanese goods exported to Australia.

4. In informal discussions the Leader of the Japanese delegation
indicated that, in his view, Japan would be able to grant licences
freely for imports of Australian tallow and hides, the sterling
area allocation for dried vine fruit could be defined to cover
Australia, licences could not be freely granted for wool but Japan
might give an assurance that apart from 10% set aside for
bilateral transactions all her wool imports would be made under
global quota, Japan was unlikely to permit Australian raw sugar to
enter at the same rate of duty as raw sugar of a slightly lower
degree of purity, and the position on wheat, barley and milk
powder was complicated by the Canadian/Japanese agreement under
which Japan is bound not to give any country special treatment on
these commodities.

5. The Japanese delegation undertook to examine the position on
films and confectionery, for which licences for imports from
Australia are not available.

6. At the request of the Queensland Butter Marketing Board, the
possibility was mentioned of establishing a recombined milk plant
in Japan. The Board is anxious to supply plant and subsequently
raw materials for the reconstituted milk.

7. Working drafts on particular points which might be covered in
an agreement were prepared and discussed with the Japanese on the
understanding that the drafts had no official status.

8. It is not anticipated that the Japanese delegation will return
to Australia. The negotiations, when resumed, will probably be
carried on through the Embassy staff in Canberra. It is now up to
the Japanese to renew negotiations after they have considered the
Australian requests.